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Political institutions and income (re-)distribution: Evidence from developed economies

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  • Feld, Lars P.
  • Schnellenbach, Jan

Abstract

We discuss the effect of formal political institutions (electoral systems, fiscal decentralization, presidential and parliamentary regimes) on the extent and direction of income (re-) distribution. Empirical evidence is presented for a large sample of 70 economies and a panel of 13 OECD countries between 1981 and 1998. The evidence indicates that presidential regimes are associated with a less equal distribution of disposable incomes, while electoral systems have no significant effects. Fiscal competition is associated with less income redistribution and a less equal distribution of disposable incomes, but also with a more equal primary income distribution. Our evidence also is in line with earlier empirical contributions that find a positive relationship between trade openness and equality in primary and disposable incomes, as well as the overall redistributive effort.

Suggested Citation

  • Feld, Lars P. & Schnellenbach, Jan, 2013. "Political institutions and income (re-)distribution: Evidence from developed economies," Freiburg Discussion Papers on Constitutional Economics 13/6, Walter Eucken Institut e.V..
    • Handle: RePEc:zbw:aluord:136
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    1. repec:bla:afrdev:v:29:y:2017:i:s1:p:1-14 is not listed on IDEAS
    2. Lars Feld, 2014. "James Buchanan’s theory of federalism: from fiscal equity to the ideal political order," Constitutional Political Economy, Springer, vol. 25(3), pages 231-252, September.
    3. Fabio Padovano & Francesco Scervini & Gilberto Turati, 2021. "Comparing governments’ efficiency at supplying income redistribution," Constitutional Political Economy, Springer, vol. 32(1), pages 68-97, March.
    4. Klaus Gründler & Tommy Krieger, 2015. "Democracy and Growth: Evidence of a New Measurement," CESifo Working Paper Series 5647, CESifo.
    5. Feld Lars P. & Schmidt Christoph M., 2016. "Jenseits der schrillen Töne: Elemente für eine rationale Diskussion über die Ungleichheit von Einkommen und Vermögen in Deutschland," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 17(2), pages 188-205, July.
    6. Fabio Padovano & Francesco Scervini & Gilberto Turati, 2016. "How do Governments Fare about Redistribution? New Evidence on the Political Economy of Redistribution," CESifo Working Paper Series 6137, CESifo.
    7. UNDP Regional Bureau for Africa & Ayodele Odusola, "undated". "Fiscal Policy, Redistribution and Inequality in Africa," UNDP Africa Policy Notes 2017-08, United Nations Development Programme, Regional Bureau for Africa.
    8. Benoît LE MAUX & Kristýna DOSTÁLOVÁ & Fabio PADOVANO, 2017. "Ideology and Public Policies: A Quasi-Experimental Test of the Hypothesis that Left-Wing Governments Spend More," Economics Working Paper from Condorcet Center for political Economy at CREM-CNRS 2017-01-ccr, Condorcet Center for political Economy.
    9. Simone Salotti & Carmine Trecroci, 2018. "Cross-country evidence on the distributional impact of fiscal policy," Applied Economics, Taylor & Francis Journals, vol. 50(51), pages 5521-5542, November.
    10. Nedra Baklouti & Younes Boujelbene, 2018. "Moderation of the Relationship Between Size of Government and Corruption by Democracy," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 9(4), pages 1210-1223, December.
    11. Domenico Rossignoli, 2015. "Too many and too much? Special-interest groups and inequality at the turn of the century," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 130(3), pages 337-366.
    12. Odusola, Ayodele, 2017. "Fiscal Policy, Redistribution and Inequality in Africa," UNDP Africa Reports 267032, United Nations Development Programme (UNDP).
    13. Feld, Lars P. & Frey, Christian & Schaltegger, Christoph A. & Schmid, Lukas A., 2021. "Fiscal federalism and income inequality: An empirical analysis for Switzerland," Journal of Economic Behavior & Organization, Elsevier, vol. 185(C), pages 463-494.
    14. Gründler, Klaus & Krieger, Tommy, 2016. "Democracy and growth: Evidence from a machine learning indicator," European Journal of Political Economy, Elsevier, vol. 45(S), pages 85-107.
    15. Odusola, Ayodele, 2017. "Fiscal Space, Poverty and Inequality in Africa," UNDP Africa Economists Working Papers 268726, United Nations Development Programme (UNDP).
    16. repec:rac:ecchap:2017-08 is not listed on IDEAS
    17. Christian Houle, 2017. "Inequality, ethnic diversity, and redistribution," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 15(1), pages 1-23, March.
    18. Christian Houle, 2017. "Inequality, ethnic diversity, and redistribution," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 15(1), pages 1-23, March.

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    More about this item

    Keywords

    Redistribution; Formal Institutions; Fiscal Decentralization; Presidential and Parliamentary Regimes; Electoral Systems;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • P50 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - General

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